This paper investigates the characteristics of price dispersion in the U.S. Treasury securities market. After a theoretical treatment of why such dispersion exists, empirical evidence is presented which shows that dispersion is influenced by characteristics of securities (such as volume and maturity) and by market supply-demand conditions (as reflected in price-level changes). It is also shown that the cost of liquidity services in a competitive market is determined by price dispersion and is not equal to the bid-ask spread.

This paper investigates the characteristics of price dispersion in the U.S. Treasury securities market. After a theoretical treatment of why such dispersion exists, empirical evidence is presented which shows that dispersion is influenced by characteristics of securities (such as volume and maturity) and by market supply-demand conditions (as reflected in price-level changes). It is also shown that the cost of liquidity services in a competitive market is determined by price dispersion and is not equal to the bid-ask spread.

The concept of "economically rational" expectation formation is developed for a regime in which the acquisition and use of some information sets are nonnegligible. The concept provides a middle ground between "autoregressive" expectation formation and "rational" expectation formation. A necessary condition for the use of nonnegligible cost information sets is that such sets serve as leading indicators or more formally satisfy the causality conditions of Granger (1969). Using a time series modeling identification methodology developed by Box and Jenkins (1970) and Haugh (1972), we test the causal relationship between the rate of inflation and various monetary and fiscal aggregates. Surprisingly, we cannot reject the hypothesis that the rate of inflation is independent of the monetary and fiscal aggregates considered. Since the proposed leading indicator series contain no incremental predictive power once the information contained in the past history of inflation is efficiently utilized, we conclude that autoregressive expectation models may indeed represent economically rational price expectation formation.

This article reports the results of an empirical study which has bearing upon issues of the accuracy of management forecasts of income in particular and the time series properties of earnings data. From the standpoint of whether corporate forecasts of earnings should be disclosed, the question of accuracy is relevant. This article utilizes the Box-Jenkins methodology in the determination of the most appropriate time series model for each firm in the sample. The proposition that management forecasts of income should prove fairly accurate is not supported by the results of this study. In cases in which management forecasts proved reasonably accurate, overall they were not more so than those generated from the time series models. It remains possible that the management forecasts may contain additional information regarding risk or return. For example, market participants may use management forecasts and time series analysis. With respect to the time series properties of quarterly earnings, the results clearly demonstrate the significance of seasonality in quarterly earnings.

The article focuses on acceptance sampling plans for auditing. The interest in statistical sampling among accountants has become more pronounced and has broadened from problems of acceptance sampling to include techniques of statistical estimation. The paper contains a brief review of concepts, design and construction of both single sampling plans (SSP) and sequential sampling plans and presents a new cost optimization model with illustrative results for selection of the least-cost sampling plan. Throughout the paper, authors assume that the population is large relative to the sample size. Acceptance sampling consists of drawing samples or groups of samples from a population, examining these for properties of interest and finally, reaching some decision based upon the sample results. Elements of an acceptance-sampling plan are the method of sampling, the sample sizes and the appropriate decision rules for reaching some decision. The simplest acceptance sampling plan, an SSP, consists of the selection of a random sample of N items; the determination of the number of errors or defectives; and comparison of this quantity, with a previously determined acceptance number, or rejection number.

The article presents comments of authors on the article "Prediction Achievement and Simulated Decision Makers As an Extension of the Predictive Ability Criterion," by Robert Libby published in the July 1975 issue of the periodical "The Accounting Review." Libby maintains that predictive ability is an inadequate information evaluation criterion because it does not consider explicitly the ability of the decision maker (DM) to utilize information. Libby argues that the prediction achievement index of the Brunswik Lens Model is a useful extension of the predictive ability criterion because it incorporates predictive ability as well as the DM's ability to utilize information. High prediction achievement demands not only high predictive ability, but correct utilization of information. Objectives of this comment are to identify those areas of accounting where prediction achievement is clearly an inappropriate index of usefulness and to question whether prediction achievement is an unqualified extension of predictive ability in any area accounting. The comment is organized around the two-part framework for the evaluation of accounting numbers used by the Committee on Asset Valuation Bases which originally proposed the use of the Brunswik Lens Model in the evaluation of accounting alternatives.